Is Your Tax Refund Smaller This Year? Here’s Why

Smaller?

Many Americans may be in for a shock when they file their taxes and find out their expected tax refund. Tax experts say that Americans may be getting a smaller tax refund than they expect due to the pre-payments on the Child Tax Credit.

Dean Lyman, CFP, says, I am expecting many families to have smaller tax refunds this year.

Had a baby after 2020?

The only group that will definitely have a higher refund will be those who did not receive the Advance Child Tax Credit for the last six months of 2021 or who have had a new child since the end of 2020. Almost all other families who did get checks will get refunds smaller than 2020 (all other tax factors being equal!)

Advance Child Tax Credit 

The Advance Child Tax Credit was a payment that was half of the new Child Credit amount. The Child Tax Credit was increased from $2,000 per child in 2020 to $3,600 for each child under age 6. For each child ages 6 to 16, it increased from $2,000 to $3,000.

Want to read more about why your tax refund may be smaller this year?

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